Nivea Company is planning to introduce a new product. Market research information suggests that the product should sell 1000 units at OMR 225 per unit. The company seeks to make a mark- up of 45% product cost. It is estimated that the lifetime costs of the product will be as follows: 1. Design and development costs OMR 22000 2. Manufacturing costs OMR 150 per unit 3. End of life costs OMR 3000 By analyzing the life cycle cost of the product, do you recommend the company to produce the new product?

Nivea Company is planning to introduce a new product. Market research information suggests that the product should sell 1000 units at OMR 225 per unit. The company seeks to make a mark- up of 45% product cost. It is estimated that the lifetime costs of the product will be as follows: 1. Design and development costs OMR 22000 2. Manufacturing costs OMR 150 per unit 3. End of life costs OMR 3000 By analyzing the life cycle cost of the product, do you recommend the company to produce the new product?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

See similar textbooks

Similar questions

Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
A company is planning a new product. Market research information suggests that the product should sell 20,000 units at $35.00/unit. The company seeks to make a margin of 20% on sales. It is estimated that the lifetime costs of the product will be as follows: a. Research and development costs $60,000 b. Manufacturing costs $25/unit c. Decommissioning Costs $40,000 What is the Target Cost per unit? What is the original lifecycle cost per unit?
Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 What is the desired profit per unit? a. RO 6 per unit b. RO 10 per unit c. RO 5 per unit d. RO 15 per unit
A company is planning a new product. Market research information suggests that the new product will sell 10,000 total units at a price of $21.00 per unit. The company estimates the lifetime costs of the product as follows: Estimated costs Design and development costs: $50,000 Manufacturing costs: End-of-life costs: $10.00 per unit $20,000 The company estimates that if it were to spend an additional $15,000 on design, then manufacturing costs could be reduced. a) What is the target cost of the product if the company seeks a markup of 40% of product Round answer to two decimal places. $ Given the target cost, would you expect the company to launch the product? Yes ✰ b) What is the maximum allowable product manufacturing cost per unit if the company seeks a markup of 40% of the original life-cycle cost? Round answer to two decimal places. $ Using the total life-cycle cost to determine target product cost, would you expect the company to launch the product? No c) Assume the additional…
8/Nivea Company is planning to introduce a new product. Market research information suggests that the product should sell 1000 units at OMR 225 per unit. The company seeks to make a mark-up of 45% product cost. It is estimated that the lifetime costs of the product will be as follows: 1. Design and development costs OMR 22000 2. Manufacturing costs OMR 150 per unit 3. End of life costs OMR 3000 By analyzing the life cycle cost of the product, do you recommend the company to produce the new product? a. No, the product generate profit by producing this product b. Yes, the product cannot generate profit by producing this product c. Yes, the product generate profit by producing this product d. No, the product cannot generate profit by producing this product
A company is planning a new product. Market research information suggests that the new product will sell 10,000 total units at a price of $21.00 per unit. The company estimates the lifetime costs of the product as follows: Estimated costs Design and development costs: $50,000 Manufacturing costs: End-of-life costs: $10.00 per unit $20,000 The company estimates that if it were to spend an additional $15,000 on design, then manufacturing costs could be reduced. a) What is the target cost of the product if the company seeks a markup of 40% of product Round answer to two decimal places. $ 15 Given the target cost, would you expect the company to launch the product? Yes + b) What is the maximum allowable product manufacturing cost per unit if the company seeks a markup of 40% of the original life-cycle cost? Round answer to two decimal places. $ 8 Using the total life-cycle cost to determine target product cost, would you expect the company to launch the product? No ✰ c) Assume the…
Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 What is target cost per unit to achieve the desired profit? a. RO 24 per unit b. RO 25 per unit c. RO 22 per unit d. RO 20 per unit
Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 What is the original lifecycle cost per unit and is the product worth making on that basis? a. RO 23 per unit; The product is worth making b. RO 28 per unit; The product is not worth making c. RO 24 per unit; The product is worth making d. RO 29 per unit; The product is not worth making
Concord Corporation plans to introduce a new product and is using the target cost approach. Projected sales revenue is $1740000 ($6.00 per unit) and target costs are $1537000. What is the desired profit per unit? O $0.70 O $3.00 O $5.30 O None of the above
Concord Corporation plans to introduce a new product and is using the target cost approach. Projected sales revenue is $1740000 ($6.00 per unit) and target costs are $1537000. What is the desired profit per unit? CCoC Cla O $0.70 O $3.00 O $5.30 O None of the above
Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 Based on the above case, answer the following THREE questions: Question text What is target cost per unit to achieve the desired profit? a. RO 20 per unit b. RO 25 per unit c. RO 24 per unit d. RO 22 per unit Clear my choice Question text What is the desired profit per unit? a. RO 5 per unit b. RO 15 per unit c. RO 10 per unit d. RO 6 per unit Clear my choice Question text What is the original lifecycle cost per unit and is the product worth making on that basis? a. RO 29 per unit; The product is…
Marigold Corp. is using the target cost approach on a new product. Information gathered so far is as follows: Expected annual sales Desired profit per unit Target cost What is the unit selling price? O $0.30 O $0.64 O $0.62 O $0.32 500000 units $0.32 $150000